Religion as we knew it in Civ4 has been removed, according to some article (too many articles, don't know where anything comes from!). However, it is still "in" in the "Social Policies". Apparently, it's sort of like a tech tree, where you can "evolve" your civics. So for religion, I think they said it was something like:
Polytheism --> Monotheism --> Theocracy
Which really is, though not terrible in and of itself, kind of sad... It shows a really Western-centric view of religion, wherein monotheism is inherently more "advanced" than polytheism, and that the most "complex" religions automatically become theocracies.
Oh well. I hope that when they say diplomacy will "replace" religion, so to speak, that the diplomacy in Civ5 will be really intersting.
That may just be assuming bad faith (no pun intended) on behalf of the developers, really. It's just as possible that they simply are pointing out that monotheistic religions have basically all appeared after the development of polytheistic religions in the area (Abrahamic religions, for example, in Judea; Sikhism), and thus like how Communism usually comes after Democracy in your average Civ IV research path, while it is chronologically later, it's not necessarily more advanced. But Theocracy probably shouldn't be tethered to Monotheism: you should get to have as many Tibets as you do Irans, but that may just be the devs being shortsighted or trying to give Monotheism more value, especially if they're sapping religions from being tied to them.
I must admit that I'm disappointed in the removal of religions from the game. They did help a lot with public happiness, culture, research, and made diplo more interesting. There were, of course, a number of serious problems with the implementation: old religions being peskily resilient, later religions (Islam in particular) being less useful to pretty much worthless, shrines being cash cows, etc. However, the dev team's apparent fix for these problems (take a fire axe to the concept) seems excessively draconian. Surely there would have been some better way to try to fix these problems, and I think a lot of us would have preferred a little revamping to out-and-out annihilation. Civ 3 air units were ridiculous (you could easily level a city without touching the defenders inside, and "precision" air strikes were both too late in the game and worthless anyway), but instead of simply dumping the model, the designers fixed it and released it in Civ IV. I'm not sure why no such effort has been made here, but it really doesn't sit well with me.
I'll admit that I'm skeptical. The dev team said that new advanced diplomacy will cover for the void in the game made by annihilating religion and espionage, but really, how can the diplomacy become
more advanced by eliminating some of the most powerful components of it? It's like an airline claiming that better in-flight service will make up for the elimination of the snack service and in-flight movie. What I can't understand is how the designers can be shying away from fixing or even including elements that were somewhat controversial when introduced in the last game (collateral damage is a non-issue now, I guess) while at the same time introducing rampant changes to the gameplay that will ultimately likely and already kind of are proving to be even more divisive and problematic. I guess I just hope that the game designers reconsider this by the time the game is done.